THE European Central Bank (ECB) has unveiled its latest "big bazooka" with a commitment to help euro area countries by buying their bonds on the markets.

Ireland will benefit from the latest move after ECB chief Mario Draghi said the bank will buy bonds of countries in bailout programmes that are trying to return to the markets, as long as they continue to live up to bailout targets.

Mr Draghi also said any coalition tension in Ireland is not a concern, but offered no update on Ireland’s hope for a bank debt deal.

“The Irish government has been an exemplary model of compliance, I am confident that whatever the tensions this will continue to be so,” he said in Frankfurt.

In a move aimed at reassuring the markets, the ECB said it will share the same risks as any other investor when it buys the bonds.

That did not happen when Greece effectively defaulted on its debts that were held by the private sector but not debt owed to the ECB.

Dubbed “outright monetary transactions” there is no limit on the scale of the new bond buying programme.

It will replace a previous bond purchasing programme that was shelved last year.

The new move will create a "fully effective backstop", ECB President Mario Draghi said today.

The ECB Governing Council agreed on the "modalities of outright monetary transactions", Draghi told a news conference after the Council's monthly policymaking meeting in Frankfurt.

Seeking to back up his pledge to do whatever it takes to preserve the euro, Draghi said the new bond-buying programme, aimed at the secondary market, would "safeguard the monetary policy transmission in all countries in the eurozone area".

It would address bond market distortions and the "unfounded" fears of investors about the irreversibility of the euro.

The scheme, which the Bundesbank is known to have opposed, would be a "fully effective backstop to prevent potentially destructive scenarios", he said.

"We are strictly within our mandate," Draghi said.

"The details ... released today add to the credibility of the safety net taking shape in the euro zone and should support demand for euro zone assets," said Andrew Cox, G10 strategist atCitiFX in New York.

Pressure on Draghi intensified after an unsubstantiated German newspaper report last week that Bundesbank chief Jens Weidmann had considered resigning over his opposition to bond-buying, although several sources say he has made no such threat and believes in staying at the table to argue his case.

Draghi succeeded in securing overwhelming support on the Governing Council for a plan that Weidmann can live with, despite his apparent negative vote.

The Bundesbank chief had expressed concern that intervening in the bond market would break the ECB taboo of financing euro zone member states. Other ECB policymakers saw a greater urgency to help Spain and Italy and prevent the euro zone crisis from deepening.

Renewed ECB intervention in the euro zone's bond markets is crucial to buy governments time to come up with a longer-term response to the bloc's debt crisis, which began in early 2010.

Spanish and Italian government bond yields have fallen significantly since Draghi said on Aug. 2 that the ECB would buy bonds issued by Madrid and Rome.

They fell further after he fleshed out his plan to intervene on Thursday.

The ECB would not target specific bond yields, Draghi said.

With Germany's constitutional court not due to rule on the new ESM rescue fund until next week, there was no prospect of the ECB intervening immediately.

"A number of investors expect that the button will be pushed without further ado, but it is a bit more complicated than that," Deutsche Bank economist Gilles Moec said.

Highlighting the euro zone's economic predicament, Draghi said growth in the region would recover only gradually.

Fresh ECB staff projections pointed to the economy contracting this year by between 0.2 and 0.6 percentage points.

One downside for policymakers may be an increase in commodity prices, which were buoyed by the ECB announcement.

Draghi also said the ECB was prepared to waive its senior creditor status on bonds it purchased - meaning it would be treated equally with private creditors in case of default.

The central bank hopes that by removing private investors' concern about being paid back last in the event of a sovereign default, they will not head for the exits if the ECB intervenes and buys bonds.

The ECB assumed preferred creditor status in Greece's debt restructuring earlier this year, leaving private investors to suffer a write-down in the value of their Greek sovereign bond holdings while the paper it held was untouched.

In another potential sop to the Bundesbank, Draghi said all bond purchases would be "sterilised" by taking in an equivalent amount in deposits from banks to avoid any risk of inflation.

The ECB's insistence on countries agreeing to strict conditions before it buys their bonds fed doubts about whether Spain would seek help, and led to disappointment with the new ECB bond-buying programme among some investors.

Spanish Prime Minister Mariano Rajoy and German Chancellor Angela Merkel said they did not discuss conditions for aid for Spain, despite expectations Rajoy would seek Germany's support for a bailout in a bilateral meeting in Madrid on Thursday.

"A lot depends on the country asking for help through the ESM, and Spain doesn't seem to be ready. It means that a lot remains in the hands of politicians," said Francois Savary, chief investment officer at Reyl in Geneva.

"The Germans can put tough conditions on a potential Spanish plan that would impede Rajoy to accept it," he added.

Draghi said bond buys would be linked to "strict and effective conditionality" and that purchases would be focused on debt maturities up to three years.

"The involvement of the IMF shall be sought also for the design of country-specific conditionality and the monitoring of such programmes," he said, adding that now it was up to the governments of the euro zone to act.